Forms of Business Organisation - Vocabulary Review

These vocabulary flashcards provide definitions for key terms related to forms of business organisation such as sole proprietorship, partnership, cooperative societies, and joint stock companies as discussed in Chapter 2 of the Business Studies textbook.

Sole Proprietorship

A form of business organisation which is owned, managed and controlled by an individual who is the recipient of all profits and bearer of all risks.

Soul

A term in business implying "only", used in the context of ownership.

Proprietor

A term referring to the "owner" of a business entity.

Unlimited Liability

A situation where an owner is personally responsible for the payment of debts if business assets are insufficient, meaning personal possessions like a car or property could be sold and used to repay the debt.

Joint Hindu Family Business

A specific form of business organisation found only in India, owned and carried on by members of the Hindu Undivided Family (HUF) and governed by Hindu Law.

Karta

The eldest member and head of a Joint Hindu Family business who controls the enterprise and possesses unlimited liability.

Co-parceners

Members of a Joint Hindu Family who have equal ownership rights over the property of an ancestor.

Hindu Succession (Amendment) Act, 2005

The law stating that the daughter of a coparcener shall become a coparcener by birth and have equal rights in property regardless of gender.

Partnership

Defined by the Indian Partnership Act, 1932 as the relation between persons who have agreed to share the profit of the business carried on by all or any one of them acting for all.

Mutual Agency

The principle that each partner is both an agent of other partners (binding them through acts) and a principal (being bound by the acts of other partners).

Active Partner

A partner who contributes capital, participates in management, shares profits and losses, and is liable to an unlimited extent to creditors.

Sleeping or Dormant Partner

A partner who contributes capital and shares profits and losses with unlimited liability but does not take part in day-to-day activities.

Secret Partner

A partner whose association with the firm is unknown to the general public, though they contribute capital and share management and profits.

Nominal Partner

One who allows the use of their name by a firm but does not contribute capital or participate in management, while remaining liable to third parties for debts.

Partner by Estoppel

A person who, through their own conduct or behavior, gives an impression to others that they are a partner, making them liable for debts extended on the basis of that impression.

Partner by Holding Out

A person who is not a partner but knowingly allows himself/herself to be represented as a partner in a firm.

Partnership at Will

A type of partnership that exists as long as the partners want and is terminated when any partner gives a notice of withdrawal.

Particular Partnership

A partnership formed for the accomplishment of a specific project or activity for a specified time period, dissolving automatically upon completion.

Limited Partnership

A partnership where the liability of at least one partner is unlimited whereas the rest may have limited liability; in India, permitted after the New Small Enterprise Policy in $1991$.

Partnership Deed

The written agreement that specifies the terms and conditions governing the partnership relations, duties, and profit distribution.

Cooperative Society

A voluntary association of persons who join together with the motive of welfare of members and protect their economic interests via a registered legal identity.

Consumer’s Cooperative Societies

Societies formed to protect consumer interests by eliminating middlemen and purchasing goods in bulk directly from wholesalers for members.

Producer’s Cooperative Societies

Societies set up to protect small producers by supplying raw materials and equipment and buying their output for sale.

Marketing Cooperative Societies

Established to help small producers sell products at reasonable prices by pooling output and performing functions like transportation and warehousing.

Farmer’s Cooperative Societies

Established to provide better inputs like seeds, machinery, and fertilizers to farmers at reasonable costs to increase productivity on fragmented land.

Credit Cooperative Societies

Established to provide easy credit on reasonable terms and low interest rates to protect members from exploitation by lenders.

Cooperative Housing Societies

Established to help people with limited income construct houses at reasonable costs, often providing plots or flats with installment payment options.

Joint Stock Company

An association of persons formed for business activities with a legal status independent of its members, characterized as an artificial person with perpetual succession.

Artificial Person

The status of a company as a creation of law that can own property, borrow money, and enter contracts, but cannot perform physical human functions like breathing or talking.

Perpetual Succession

The characteristic of a company that its existence is not affected by the death, insanity, or insolvency of members; it can only be ended by specific legal winding up procedures.

Board of Directors

The chief managing body of a company elected by shareholders, responsible for management and control of the firm's affairs.

Oligarchic Management

A situation in large companies where, despite being democratic in theory, the Board of Directors exercises power that is often rule by a few.

Private Company

A company that restricts the transfer of shares, has between $2$ and $200$ members, and does not invite the public to subscribe to its securities.

Public Company

A company with a minimum of $7$ members and no maximum limit, which allows free transfer of securities and invites the public to subscribe to its shares.